Suppose a worker in France can produce 6 loaves of bread or 3 shirts in a day an

Question

Suppose a worker in France can produce 6 loaves of bread or 3 shirts in a day and a worker in Germany can produce 10 loaves of bread or 6 shirts in a day. The opportunity cost of bread in France is _____ shirt(s).

5/3

Suppose a worker in Denmark can produce 8 textiles or 6 toys in a day and a worker in Mexico can produce 12 textiles or 4 toys in a day. Denmark has an absolute advantage in ______ and Mexico has an absolute advantage in _______.

toys; textiles

Large production volumes create economies of scale by spreading which type of costs?

Explanation / Answer

a) The opportunity cost of bread is 1/2 the shirt because if France is using the same resources they will only be able to produce 3 shirts in comparison to 6 loaves of bread. the answer is 1/2.

b) Denmark has an absolute advantage in the production of toys and Mexico in the production of textiles.

c) It spreads the variable cost.

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